7 tips for making the most of digital gift cards

There's a new gift card in
town and it's set to give its plastic counterpart a run for the money.

Spending on traditional gift
cards reached $91 billion last holiday shopping season, but the market for
digital gift cards has doubled in the past three years, according to Lexington,
Mass.-based consulting firm Urban Wallace Associates, leaving consumers
pondering the benefits of leaving the plastic behind.

"Simply
put, digital gift cards are easy," says Leo Jakobson,
senior editor for Incentive
Magazine, which covers the use of gift cards as a promotional tool. "They are
easy to distribute via email. And digital gift cards can be used online, at
home, at work or from a smartphone, rather than requiring the user to trek to a
brick-and-mortar store."

Digital gift cards come with
many of the same rules as their plastic counterparts. For example, they adhere
to Credit
CARD Act of 2009 stipulations that require retailers to disclose
information about fees and limitations. Yet there are some aspects that make
them more desirable, says David Stone, chief executive officer of CashStar, the
company behind the e-gift cards for companies such as Home Depot, Staples
and Starbucks.

For example, it's typically
easier to have a new e-gift card sent to you if you lose the original, since
the retailer can void the old one and e-mail a new one instantly, Stone says. Likewise, digital gift cards are easier on
the environment since many retailers can scan a barcode or key in the card
number directly from a smartphone. But
before you give up the plastic, consider the following seven tips for a rewarding
virtual gifting experience whether you're on the sending or receiving end.

Read the fine print. Before purchasing a digital gift card, take the time
to read about what the recipient will be getting, such as whether he or she can
print the card out and redeem it in a brick-and-mortar store or whether the
card has to be used online. If an online storefront won't give you information
about expiration dates, terms and conditions, look for another retailer that will.

Take advantage of personalization. Many digital gift cards let senders write messages,
attach photos or upload video to give an e-gift card the personal touch. Some
even let senders deliver the e-gift to the recipient's Facebook wall, a feature
utilized by Monique Hayward, an iPhone application developer from Beaverton,
Ore., who sends digital gift cards on birthdays and other occasions. The
Facebook feature "has the added benefit of showing the recipient's friends that
I'm a cool person for getting that gift and publicizing it 'out loud,'" Hayward
says.

Look for a customer service number. Before making a digital gift card purchase, make sure
there is an offline way to get in touch with the company in case something goes
wrong. After all, "emails can end up in a spam folder and sometimes people can
lose them, so make sure you can reach out and get in touch with somebody," says
Stone.

Stick with retailers you trust. Avoid sending e-gift cards from online retailers that
you have little to no knowledge about. "Look for somebody that's done a lot of
volume and has a lot of experience in the industry," Stone says. Just as you
would with plastic gift cards, you also want to steer away from retailers that
you know are in danger of shutting down since a gift card would likely not be
redeemable from .

Give the recipient a head's up. Whenever Hayward sends a gift card worth a
significant amount of money, she doesn't leave it to chance. In instances when
the gift card is worth $100 or more, "I warn the recipient in advance," she
says. Hayward also applies this rule with retailers she is unfamiliar with
"like in the case of an e-gift card that I gave to a girlfriend to treat
herself to a local spa."

Don't underestimate the power of email preview. Not all e-gift cards appear the same. "Sometimes they
look like messages coming directly from the retailer and it's not clear that
they came from a friend or family member," says Nikki Baird, managing partner
of Miami-based Retail Systems Research, which evaluated the strengths and
weaknesses of digital gift cards in a report last year. A preview pane lets a
sender see the gift card just as it will appear to the recipient. If the e-card
looks like it might not stand out in a crowded email box, let the recipient
know to look out for it.

Seek out delivery notification. While many retailers will let you schedule a digital
gift card to go out on a particular day, some give you no control over when the
card will be delivered, Retail Systems Research found. Not only should you look
for digital gift cards that will let you designate the date of delivery, but
you can rest easier with a retailer that lets you know when the gift is
received and opened. "Some even offer an opportunity for the recipient to reply
back and say 'thank you,'" Baird says. If you don't get delivery notification
or if too much time goes by and you haven't heard mention of the gift by the
recipient, ask if it was received since it could have been overlooked or gotten
lost in cyberspace.

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Did you like this story? Then sign up for CreditCards.com’s weekly e-newsletter for the latest news, advice, articles and tips. It's FREE. Once a week you will receive the top credit card industry news in your inbox. Sign up now!